Franciscan Alliance Announces Layoffs

InsideINdianaBusiness.com Report

The operator of 11 hospitals and health facilities in the state is planning to lay off 275 workers. Franciscan Alliance says the decision is a response to a "transformative shift in hospital economics." The system says another 650 full-time equivalent positions are being eliminated.

The cuts come as the health care provider deals with reduced reimbursements, health care reform laws and shifts from inpatient to outpatient care.

October 23, 2013

News Release

MISHAWAKA, Ind. – Franciscan Alliance announced today that the health system is responding to the transformative shift in hospital economics with system-wide staff reductions.

The reductions will affect its 11 hospitals and health facilities in Indiana. 275 employees or 1.4% of the workforce will be laid off as a result of the reduction. Franciscan Alliance has approximately 20,000 employees.

The healthcare industry is changing rapidly and economic pressures are forcing substantive changes in the field, including reduced reimbursements, new payer models, healthcare reform laws and shifts from inpatient to outpatient care.

“Franciscan Alliance has not been immune to such pressures and has found it necessary to align staffing levels to reflect lower patient volumes and reduced industry wide reimbursements brought on by reforms associated with the Affordable Care Act,” said Kevin Leahy, Franciscan Alliance president and chief executive officer.

Like other health systems, Franciscan Alliance must cut its costs of care delivery over the next 3 years by 15-20% ($375,000,000-$500,000,000) to remain viable. Last month, our South Suburban Chicago Region eliminated 125 positions. Today, our other operating divisions will notify 275 co-workers that they will be laid-off from their positions. In addition, another 650 full-time equivalent positions will be eliminated by cutting back on assigned hours, closing open positions, retirements and through attrition. The remaining 19,000 employees will see cutbacks in benefits in 2014. These cutbacks include the elimination of the 1.5% employer match to the 403b retirement savings program, elimination of the PTO buy-back program, higher employee contributions for healthcare insurance, no salary increases for management, and a new defined benefit/defined contribution pension for all co-workers not vested by 1/1/2014 in the defined benefit pension plan. The cost savings from these, and other recent pay practice changes, will help preserve hundreds of other jobs which otherwise would have to be eliminated.

“Recent trends and the new law are challenging healthcare providers to manage the continuum of care for patients more efficiently and effectively to ensure the same quality outcomes at reduced reimbursement levels,” Leahy said. “Our challenge is to staff our campuses in line with the reduced inpatient volumes that are a byproduct of recent healthcare trends and the new law,” he added.

The staff reductions are among several initiatives Franciscan Alliance has undertaken, such as streamlining patient flow processes and coordinating care across the system to deliver quality outcomes and improve patient satisfaction. Ongoing non-labor cost efficiencies continue to be researched, identified, implemented and monitored throughout the system as well.

Regarding the impact on employees affected by the reduction in workforce, Leahy emphasized, “We are profoundly aware of the impact our decisions have on the lives of our co-workers and their families. Consistent with our Franciscan Values, we will make every effort to support all Franciscan team members through these difficult changes. Those whose jobs will be affected by the workforce reduction will be provided with severance, extended health insurance where eligible, and outplacement assistance,” he said.

He added that for more than 138 years, the mission of Franciscan Alliance has remained steadfast and constant. “Whatever measures we take will not compromise our goal to provide patients the high-quality, compassionate care they expect and deserve.”

About Franciscan AllianceFranciscan Alliance is one of the largest Catholic healthcare systems in the Midwest with 13 hospital campuses, approximately 20,000 employees and a number of nationally recognized Centers of Health Care Excellence. Hospitals include: Franciscan St. Anthony Health-Crown Point; Franciscan St. Anthony Health-Michigan City.; Franciscan St. Elizabeth Health-Crawfordsville; Franciscan St. Elizabeth Health- Lafayette East; Franciscan St. Elizabeth Health-Lafayette Central; Franciscan St. Francis Health-Carmel; Franciscan St. Francis Health- Indianapolis; Franciscan St. Francis Health-Mooresville; Franciscan St. James Health-Chicago Heights, Ill.; Franciscan St. James Health-Olympia Fields, Ill.; Franciscan St. Margaret Health-Hammond; Franciscan St. Margaret Health-Dyer; and Franciscan Healthcare-Munster.